A short YouTube explanation of the BRRR (Buy, Rehab, Rent, Refinance, Repeat) real-estate strategy. The speaker walks through a numerical example showing how buying a $200,000 house with $40,000 down, adding $20,000 in rehab, then refinancing at 80% of a new $250,000 appraisal can free $40,000 cash to buy another property.
$200,000
$40,000
$20,000
$250,000
80%
Here's how the rich use debt to get even richer. It's called the Brrr method, and it works like this. Let's say you want to buy this house for $200,000. The good news is that you only need $40,000 to buy it. Now let's say you put $20,000 into rehabbing the house, so that's $60,000 all in. Once the house is rehabbed, you're going to rent it out for a higher price than if you didn't rehab it. And because it's rented out now, you can refinance the house and pull out 80% of the appraised value. Here's the best part. Because you rehabbed and rented the house, the appraised value is now $250,000 instead of the original $200,000. So the bank allows you to pull out $200,000 and you pay back the remaining $160,000 loan, giving you $40,000 in cash to go buy another property and repeat the process. Follow for more real estate hacks just like this.
Physicians and High Earners — What Real Estate Can and Can't Do for Your Taxes
